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European Union External Action

Lao PDR and the EU

Close collaboration

At the heart of the relationship is the EU-Laos Cooperation Agreement of 1997. It provides the framework for relations, setting out areas for cooperation and formalising the commitment of the two parties. A Joint Committee, held every two years in Vientiane or Brussels, allows the EU and the Government of Laos to formulate recommendations and set priorities. Collaboration also takes place on the regional and international stage through organisations such as ASEAN and ASEM.

Partners in development

The EU is one of Laos' biggest development partner in terms of grant aid for development cooperation and humanitarian assistance, and also an important trade partner. The EU programme for Laos 2014-2020 (EUR 207 million) focuses on nutrition, education and governance, while also tackling issues such as UXO decontamination, gender equality and climate change. Starting from 2016, European partners (EU, EU countries and Switzerland) are coordinating more closely on development cooperation through the European Joint Programming (2016-2020), which sets out a common vision, priorities, approach, division of labour and planned spending. Taken together, the EU and EU countries are the 4th biggest development donor in Laos, committing around EUR 70 million annually.

A commitment to democracy and human rights

Our relationship covers many areas and also includes a yearly EU-Lao PDR dialogue on human rights and good governance. The EU supports a wide range of human rights initiatives carried out by International Non-Governmental Organizations INGOs, Lao Non-Profit Associations NPA and other Civil Society Organisations, in particular through the European Instrument for Democracy and Human Rights (EIDHR).

Trading together

In its economic relations with Least Developed Countries, the EU combines specific development cooperation with initiatives to help trade and boost sustainable economic growth. The 'Everything but Arms' initiative gives unlimited access for exports from Laos to the EU market, opening the door to the biggest single market in the world. EU countries also maintain their own economic relations with Lao PDR. Trade has been growing gradually and has reached EUR 362 million in 2015.

Cultural and educational exchange

The EU-Laos relationship is about more than just trade and development. Some EU countries have developed projects to safeguard and promote Laos' cultural wealth; from temple restoration, conservation of centuries old Buddhist palm leaf manuscripts, support to the concept of a Museum of Buddhist Art and a list of endangered art objects, or training of Lao authorities in cultural management and architecture. The EU Delegation works alongside them to support various events such as the EU Film Festival and the Vientiane boat race. Educational links are also important. Both EU countries and the EU offer scholarships for Lao students and academics to study at higher education institutions in Europe.

Political dialogue is an important part of relations between Laos and the EU.

A Cooperation Agreement between the European Community (EC) and the Lao People’s Democratic Republic was signed on 29 April 1997. Its major objectives are to step up EC-Lao PDR development cooperation and to enhance and diversify economic and trade relations. This is a framework agreement with emphasis on development and economic cooperation.

Political dialogue between the EU and Laos also takes place within the framework of multilateral fora such as ASEAN and ASEM.

The EU also participates in the ASEAN Post-Ministerial meeting and the ASEAN Regional Forum, which discuss the general and economic situation of ASEAN and EU-ASEAN relations, and security issues in the region. 

The EU is committed to fair trade and open markets. It is the world’s largest trading partner and the main destination for exports from 130 countries worldwide. It therefore has a strong interest in creating conditions in which trade can prosper. Making trade easier is an important part of the EU’s strategy to help development and reduce poverty.

EU cooperation helps Lao PDR develop its trade to maximize economic development and poverty reduction and integrate the country into the world economy. Trade-related help aims at improving access to the EU market and making it easier for countries to get their products into the EU.

Lao exports to the EU enjoyed significant growth in 2015. They amounted to EUR 204.9 million from January-October 2015, growing by 16.6 percent from the same period last year. Textiles, clothing and coffee remain the largest imports from Laos.

Helping trade

The 'Everything but Arms' initiative extends import quota and duty-free access for Lao exports to the EU market, opening the door to the biggest single market in the world.

Support for exporters

The EU is committed to further opening its market especially to developing countries. A number of resources exist to assist Lao exporters to do business with the EU. The EU’s Export Help Desk is a free and user-friendly online service providing information on how to access the EU market: EU import rules, tariffs (and preferences), customs documents, rules of origin, and much more.

Chambers of commerce and economic missions

The European Chamber of Commerce and Industry in Lao PDR (ECCIL) was established in May 2011 to represent and promote the European business in Laos. This includes the promotion of investment, raising the profile of Lao PDR in the European business community and vice versa, and to promote linkages between Lao and European small and medium-sized businesses. The ECCIL was transferred from the former French Chamber of Commerce and Industry to Laos. The EU provides grants to ECCIL to increase and diversify trade and investment of European businesses, particularly small businesses, to Laos, and to the regional ASEAN market.

Trade-related technical assistance

The EU supports the second Trade Development Facility (TDF 2), a multi-donor programme that builds on the success of the first phase of the programme (2008-2014) to help the government's trade policies. Together with the World Bank, Germany, Ireland, Australia and the United States, the EU supports TDF 2 with a contribution of EUR 4 million which aims at strengthening the capacities of the Ministry of Industry and Commerce to achieve its trade related priorities: trade facilitation, policy and regulations, diversification and competitiveness and aid for trade. The EU also monitors the coherence between TDF 2 and the ASEAN and World Trade Organisation regulations. 

Overview

The EU is one of the most important development partners of Lao PDR in terms of grant aid for development cooperation and humanitarian help, and also one of its most important trade partners. EU cooperation takes two forms: programmes funded by the EU budget and managed by the European Commission; as well as through bilateral initiatives of EU countries.

EU assistance to Lao PDR started during the early 1990s when the main priorities were rural development, urban development and support for refugees returning from Thailand. EU development aid to Lao PDR between 1993 and 2006 totalled approximately €100 million.

The 2007-2013 Country Strategy for Lao PDR allocated a total amount of EUR 69 million . The current seven-year allocation (2014-2020) has increased the funding for Lao PDR to EUR 207 million.

The current EU programme for Laos covers five years and is synchronised with the Lao PDR National Socio-Economic Development Strategy (2016-2020). It allocates EUR 162 million in three sectors: nutrition, education and governance under the framework of the European Joint Programming 2016-2020, which sets out a common vision, priorities, approach, division of labour and planned spending of the EU, EU Member States and Switzerland. Taken together, the EU and EU countries are the 4th biggest development donor in Laos, committing around EUR 70 million annually.

Supporting Lao PDR to achieve the SDGs

The EU has supported Laos in its efforts to achieve the Millennium Development Goals (MDGs), in partnership with the government and other development partners, and will continue to provide assistance for the achievement of the Sustainable Development Goals (SDGs).

The EU also recognizes and supports the efforts of Lao PDR to graduate from the group of Least Developed Countries (LDCs) by 2020. The National Socio-Economic Development Plan (NSEDP) is recognised as the Government’s development policy document and poverty eradication instrument with a five-year planning horizon (7th Plan 2011-2015; 8th Plan 2016-2020), and the EU follows its formulation and implementation closely, striving to align its support with it. The EU participates at the Round Table Meetings with the Government and with other development partners to assess progress and the challenges of development cooperation in Laos.

The EU works towards an increased level of coordination, aid efficiency and division of labour, with current support focusing mainly on economic and social development and reforms with a particular emphasis on better health and education services and on agriculture and rural development. The promotion of human rights, good governance and the sound management of public finances also feature prominently.

Programming cycle and types of Cooperation Instruments

EU funding is in the form of grants. For 2014-2020, the EU has simplified its funding toolkit so that there are now fewer instruments through which it provides external assistance.

The Development Cooperation Instrument (DCI) is the main instrument for EU operations in Asia. The budget allocated under the DCI for the period 2014-2020 is EUR 19.6 billion: EUR 11.8 billion for geographic programmes (of which EUR 207 million for Lao PDR), EUR 7 billion for thematic programmes, EUR 845 million for the Pan-African programme. Funding is allocated annually towards: Investing in People; Environment; Non-State Actors/ Local Authorities; Food Security; and Migration/ Asylum.

Other relevant instruments include: the European Instrument for Democracy and Human Rights (EIDHR) (more than EUR 1 billion for the period 2014-2020); the Instrument for Stability (more than EUR 2 billion for the period 2014-2020); and EU Humanitarian Aid (on average EUR 623 million per year).

The European Union has been providing humanitarian aid to vulnerable people in Lao PDR since 1993, mainly through its Humanitarian Aid Office (ECHO), supporting the provision of medicine and medical equipment to health centres, de-mining, the setting-up of safe drinking water and sanitation systems along with small infrastructures projects aiming at increasing food security levels.

Since 1998, the Humanitarian Aid and Civil Protection department (ECHO) has provided over EUR 17 million to address urgent humanitarian needs and support disaster risk reduction measures.

Providing Humanitarian Assistance

In the Saravan, Champasak, Sekong and Attapeu provinces of Lao PDR, a major outbreak of dengue was registered in 2013. ECHO joined the international efforts to save lives. Local clinics were stocked with the necessary items to diagnose and treat people affected by the disease. Communities have been mobilised for control activities in villages and temples. The project was implemented in nine provinces by Health Poverty Action with a grant from ECHO.

At the end of 2013, the EU gave EUR 166 000 to Laos through the International Federation of Red Cross and Red Crescent Societies following the devastating effects of cyclone Wutip, which brought heavy rainfall to the southern provinces of Champasak, Salavan, Xekong and Attapeu. The funds were used to provide basic items to 10 000 people in need.

Preparing for Disasters

Since 1998, ECHO provides support to the people of Lao PDR through its Disaster Preparedness Programme (DIPECHO) aiming to assist vulnerable people to reduce the impact of natural disasters on their lives. These projects support community-based activities, local capacity building, small scale mitigation actions, early warning systems, education, and public awareness campaigns. Most recently, ECHO allocated EUR 1.2 million to Lao PDR under the Disaster Preparedness Programme for Southeast Asia for the period 2014-2015.

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